Hello Folks,
I'm semi pro trader and I really would like to add a nice trend trading system to my portfolio.
I struggle over and over about these things on trend trading in general when developing/testing/optimizing:
The spread:
The spread is almost always the killer of an "ok" Trend trading. Of course you can trade higher TF tp avoid spread influence (daily, 8 hours etc., at least 40 Pips TP's etc. ) but you pay the price for that: On a single currency pair you have than may be 3-6 trades per month(!). I cannot deal with that. That is wayyyy to little for me. I can tell you why: When you only have 3-6 trades per month on a single currency pair: How much do you have to risk per trade? 1% or even 3% of your account balance? That is completely crazy in my view.
The weekly, even monthly drawdowns or closing a month in minus:
That is one of the most problematic things for me. Due to little trades (<100 trades per month on let'S say 10 currency pairs, so each pair 10 trades which suits around 30 - 50 pips TP to avoid spread problematic) of course you can get weeks or even month which ends in minus. That is no option for me. Anybody here really profitable every month with trend trading systems and TP's > 40 pips?
Inconsistancy of the R:R ratio:
I analyzed a lot of breakout systems etc. They all had the same problem: Periods of drawdowns R:R 1:1 for even 4 month in a row, not counted the spread and than 2 month making the R:R Ratio going even to 1:2 for the whole year.
Question: Is that the characteristic of trend/breakout systems? 80% of the time 0 and 20% of the time 100? Obviously it is. Due to that it is almost impossible to implement propper money management due to missing repeating outcome patterns of trades.
Positive aspect of trend trading which outperform all negative aspects:
But there is one huge advantage of trend trading: That is position sizing. I think not any strategy other trading strategy can get you millionaire faster than trend trading. It lays in the nature itself: If you make 10%, you can invest 10% more - with the same risk. That is incredible powerful. Lots of other strategies can not or can only provide very small advantages in rising position sizes that fast. Of course you can burn your account also but in general that doesn't matter because one of your trys will probably lead you into traders heaven - that's the big issue on trend trading.
So how do you treat your drawdowns or phases of side markets on trend trading? How do you deal with monthly trading being in minus? And don't tell me you are not down by monthly statement at all... That is the problem with trend trading. It lays in nature itself that that is not possible, due to facts I wrote before.
Let's start the discussion on that. I want to learn sth. new
I'm semi pro trader and I really would like to add a nice trend trading system to my portfolio.
I struggle over and over about these things on trend trading in general when developing/testing/optimizing:
The spread:
The spread is almost always the killer of an "ok" Trend trading. Of course you can trade higher TF tp avoid spread influence (daily, 8 hours etc., at least 40 Pips TP's etc. ) but you pay the price for that: On a single currency pair you have than may be 3-6 trades per month(!). I cannot deal with that. That is wayyyy to little for me. I can tell you why: When you only have 3-6 trades per month on a single currency pair: How much do you have to risk per trade? 1% or even 3% of your account balance? That is completely crazy in my view.
The weekly, even monthly drawdowns or closing a month in minus:
That is one of the most problematic things for me. Due to little trades (<100 trades per month on let'S say 10 currency pairs, so each pair 10 trades which suits around 30 - 50 pips TP to avoid spread problematic) of course you can get weeks or even month which ends in minus. That is no option for me. Anybody here really profitable every month with trend trading systems and TP's > 40 pips?
Inconsistancy of the R:R ratio:
I analyzed a lot of breakout systems etc. They all had the same problem: Periods of drawdowns R:R 1:1 for even 4 month in a row, not counted the spread and than 2 month making the R:R Ratio going even to 1:2 for the whole year.
Question: Is that the characteristic of trend/breakout systems? 80% of the time 0 and 20% of the time 100? Obviously it is. Due to that it is almost impossible to implement propper money management due to missing repeating outcome patterns of trades.
Positive aspect of trend trading which outperform all negative aspects:
But there is one huge advantage of trend trading: That is position sizing. I think not any strategy other trading strategy can get you millionaire faster than trend trading. It lays in the nature itself: If you make 10%, you can invest 10% more - with the same risk. That is incredible powerful. Lots of other strategies can not or can only provide very small advantages in rising position sizes that fast. Of course you can burn your account also but in general that doesn't matter because one of your trys will probably lead you into traders heaven - that's the big issue on trend trading.
So how do you treat your drawdowns or phases of side markets on trend trading? How do you deal with monthly trading being in minus? And don't tell me you are not down by monthly statement at all... That is the problem with trend trading. It lays in nature itself that that is not possible, due to facts I wrote before.
Let's start the discussion on that. I want to learn sth. new